Student debt plan meets criticism

Student debt plan meets criticism

The federal government has been urged to tighten student loan restrictions, with a goldmine of higher education debt unlikely to ever be paid back under current rules.

The Grattan Institute released their Doubtful Debt study on Sunday, predicting $7.1 billion - a quarter of the $30.1 billion outstanding under the Higher Education Loan Program as at June 30, 2013 - will never be repaid.

Current repayments are tied to the Australian taxation system, meaning students who move overseas do not repay their debts until they move back to Australia and earn over the threshold of $51,309.

The Grattan Institute recommends a minimum annual repayment for students living overseas, and a call to begin reclaiming debts from deceased students with estates worth over $100,000; currently, debts from deceased students are not required to be paid by their family or trustees.

Up to $800 million a year could be collected under these rules, but University of Wollongong students are not convinced.

"That money would be great for the system, but basing education funding dreams on dead or overseas students is a little naive," Wollongong Undergraduates Students Association president Mitchell Bresser said.

"It's unnecessary. There are other ways the government could increase revenue or decrease spending."

Mr Bresser said students moved overseas out of necessity rather than choice, and should not be punished.

"I don't think anyone moves specifically to avoid debts. There is a lack of opportunity in some sectors, so students, especially in science or medicine, may have to go overseas to find work or access research funding," he said.

Former UOW journalism student Samantha Auciello spent 18 months living and working in Thailand and the United Kingdom from September 2012, and said people who lived overseas brought experience and knowledge back to the economy.

"Most students who go overseas end up coming back, not many students go overseas for good. It was always my intent to come back to Australia, work, and pay off my debts," she said.

"I paid tax on my earnings in the UK. I wasn't trying to dodge any debts, I was just getting experience to put into the workforce when I came back to Australia again."